Time to acquire: Regulatory burden and M&A activity

54 Pages Posted: 4 Mar 2020 Last revised: 14 Jan 2022

See all articles by Attila Balogh

Attila Balogh

University of Melbourne - Department of Finance

Usha Creedy

The University of Sydney - Discipline of Finance

Danika J. Wright

The University of Sydney - Discipline of Finance

Date Written: January 23, 2020

Abstract

Firms go public to make acquisitions, but private firms benefit from lower regulatory cost. Investment by newly public firms may be limited if managers need to focus on compliance instead of growth. Exploiting a 2012 US policy reform, we show that when regulatory cost is lower, firms make more acquisitions, do so more quickly after listing, and also increase other forms of investment. Examining potential unintended consequences of reduced regulation, we find that opportunistic bidding arising from higher information asymmetry does not explain these results. We inform the ongoing policy debate on broadening the scale and scope of regulatory relief.

Keywords: Initial Public Offerings, Acquisitions, Mergers, Regulatory Cost

JEL Classification: G34, G38

Suggested Citation

Balogh, Attila and Creedy, Usha and Wright, Danika J., Time to acquire: Regulatory burden and M&A activity (January 23, 2020). International Review of Financial Analysis, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3523630 or http://dx.doi.org/10.2139/ssrn.3523630

Attila Balogh

University of Melbourne - Department of Finance ( email )

198 Berkeley Street
Carlton, VIC 3010
Australia

Usha Creedy

The University of Sydney - Discipline of Finance ( email )

P.O. Box H58
Sydney, NSW 2006
Australia

Danika J. Wright (Contact Author)

The University of Sydney - Discipline of Finance ( email )

P.O. Box H58
Sydney, NSW 2006
Australia

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